The US-backed Syrian Democratic Forces (SDF) continued their advance against the Islamic State in a battle to capture its last enclave in eastern Syria.

A Reuters witness said there was a lull in fighting on Monday where Islamic State fighters could be seen strolling in their last neighbourhood of Baghouz village, near the Iraqi border where they are sheltering among civilians.

SDF commanders said the presence of civilians among the militants was compelling their fighters to proceed cautiously.

With US help, the Kurdish-led fighters are poised to seize Islamic State's last holdout. At the height of its power four years ago, Islamic State held about a third of both Iraq and Syria in a self-proclaimed caliphate.

Though Islamic State fighters still hold out in a pocket of central Syria's remote desert and have gone underground as sleeper cells in Iraqi cities, able to launch new attacks, their territorial rule is, for now, almost over.

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SDF commanders said the presence of civilians among the militants was compelling their fighters to proceed cautiously.